Informist, Friday, Oct 13, 2023

By Padmini Dhruvaraj

MUMBAI – As the Nifty 50 slipped into the red today, investors placed short bets in out-of-the-money put options between 19300 and 19700 strike prices of the contracts expiring Thursday. Meanwhile, call options writing was seen in in-the-money strike prices, indicating further weakness in the market. 

The 50-stock index opened lower tracking weakness in the global equity markets, recouped some gains, but eventually ended 0.2% lower at 19751.05 points.

"Weak global cues and a sharp rise in crude oil prices dampened the market sentiment as banking and technology stocks led the downfall," said Amol Athawale, vice president and technical research at Kotak Securities Ltd.

"While the market is already coping up with global economic uncertainty, concerns over the flare up in Israel-Palestine conflict has been making investors jittery. Investors are also worried about the persistent FII selling and the rising US dollar and treasury yield," he added.

The 19700 strike price of the put options had the highest net change in open interest with 8.36 mln new positions being added, while the premium on the contract rose 31.8% to 76 rupees. Meanwhile, aggressive put options selling was seen at 17950, 19000, and 19100 strike prices.

On the call front, premiums across strike prices declined, reflecting the bearish sentiment in the market. The 19700 strike price had the highest open interest addition of 2.65 mln. Aggressive call options selling was also seen at 20050, 20100, 20200, and 20500 strike prices.

"Nifty 50 has a support of 19650 and a resistance of 19800. Only a clear break of these levels could determine the next course of action," said Avdhut Bagkar, technical and derivatives analyst at StoxBox.

Meanwhile, the October futures contract of the Nifty 50 today closed at a discount of 17.05 points to the spot index. Open interest in the contract fell 1.87% to 9.51 mln, according to provisional data. 

Further, indices are seen muted next week and may move in a range of 19500 to 20000 points. Analysts will keep tracking movement of US bond yields and the dollar index to assess the Nifty 50's direction.

"Yields (of US Treasury bonds) and the dollar index are the two major concerns and if these move higher and Nifty 50 falls below 19500, it might be a problem," said Raj Deepak Singh, head of derivatives research at ICICI Direct Research. Singh said that the current movement in Nifty 50 is very small and it is not showing any signs of weakness, as long as the index stays above 19500 points.

--Nifty 50 Oct closed at 19734.00, down 109.50 points; 17.05-point discount to spot index

--Nifty 50 Nov closed at 19859.95, down 105.25 points; 108.90-point premium to spot index

--Nifty 50 Dec closed at 19960.00, down 106.50 points; 208.95-point premium to spot index

Infosys, Tata Motors, HDFC Asset Management Co, Tata Consultancy Services, HCL Technologies, Maruti Suzuki India, and State Bank of India were among the most actively traded underlying stocks. End

Edited by Ashish Shirke

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